Judgment

[Please note that this case has not been edited in accordance with current Singapore Law Reports house style.]

                                                                                                                                                             Judgment reserved.

LP Thean JA (delivering the majority judgment of the court):

1           The parties to the present litigation are closely related to each other. The first appellant is the mother of the respondent and the second appellant, and the third appellant is the wife of the second appellant; the second appellant is the younger brother of the respondent. The dispute centred on an undivided half share of the property, known as 101, Jalan Mastuli, Singapore (the property). Before us, the appellants accepted the findings of fact made by the learned trial judge, with one exception which we shall deal with in a moment. Accordingly, for our purpose, we respectfully adopt the facts as found by the learned trial judge.

2           The genesis of the dispute may be traced back to events which occurred some 30 years ago. In the 1960s, the first appellant, her husband and her children, including the respondent, lived at 161-Y, Lorong Ah Soo, which was an attap squatter hut. The respondent is the eldest son of the family. In 1962, the respondent left school after having completed the Senior Cambridge Examination and commenced working as a clerk. Later, in 1964 he changed his employment and worked for the British with what was then known as the Ministry of Public Buildings and Works. Admittedly, the whole family was very hardworking. The family turned the attap hut into a farmhouse rearing pigs and chickens. The first appellant herself worked as a maid for some British servicemen. The respondent’s eldest sister, Chia Lang Yang, and his younger sister, Tiah Boon Tah, also worked as maids. Situate at Charlton Park, which is about ten minutes’ walk from Lorong Ah Soo, was a housing estate then under development. One day in 1964 or thereabouts, the first appellant approached the respondent and suggested that they should purchase a house in the housing estate. Prior to that she had approached her husband but the latter declined. The respondent agreed to the first appellant’s suggestions. Accordingly, both of them proceeded to the site office where the respondent selected the property, which was the cheapest two-storey terrace house available and was priced at $24,500. They each paid $500 as the booking fee. Subsequent progress payments were made from their own funds and they did not take a loan to finance the purchase. The property was completed in late 1969 and was conveyed to them as tenants-in-common in equal shares. Subsequently, in 1970, the property was brought under the Land Titles Act and a certificate of title was issued in due course.

3           The property was first let out at a rental of $300 per month. The tenant vacated the property in 1972 and thereafter certain renovations were carried out to the property. In January 1973, the respondent got married and moved into the property with the entire family of the first appellant. However, friction soon arose between the respondent’s wife and the first appellant; the latter was described by the trial judge as “a difficult and domineering woman”. The relationship between the two of them deteriorated. The respondent was inevitably drawn into the acrimony between his wife and the first appellant and there were instances when the quarrels became very heated. The two sisters (Chia Lang Yang and Tiah Boon Tah) and the second and third appellants took sides with the mother in the dispute. The respondent’s father was seriously ill at the material time and did not involve himself in the intrigues of the household, leaving the running of it to the first appellant.

4           Things eventually came to a head. On 25 March 1973, an incident took place; the learned trial judge called this the “revolver incident”. At that time, the respondent was doing his National Service in the police force and was assigned to do beat duty with a revolver issued by his station armoury. While on duty on that day, he received a call from the second appellant inquiring when he would be moving out from the property and requesting the respondent to return home that evening for a discussion, which the respondent did. In the midst of the discussion, the respondent told the second appellant that the latter could not ask him to move out as he was a part owner of the house. A heated quarrel then ensued during which the second appellant challenged the respondent to draw his revolver which the respondent did. The father ran out of the house and called the police. The police arrived and the respondent was taken into police custody that night on the complaint made by the father.

5           On the following day, in the morning, the first appellant went to the police station and instructed the respondent to go to her lawyer’s office to transfer his share of the property to her, for which he would be paid $20,000. The respondent replied that he did not know who the lawyer was and where his office was. The first appellant then gave him a document, which was an acknowledgement of receipt of title deeds, to identify himself to the lawyer and said that she would arrange for a close family friend to bring him there. He accepted the offer and said he would go. He was released from police custody that day when the complaint made by his father was withdrawn. By this time, the respondent’s wife had removed all their belongings from the property and had shifted into their new home at 682 Serangoon Road, which belonged to his wife’s friend.

6           On the next day, ie 27 March 1973, the respondent met with the family friend, one Wong Soon Tong (Wong), at the latter’s bookstore, who then brought him to the office of a solicitor, Tan See Swan (Tan), at People’s Park. At the office, Wong informed Tan that the respondent had come to sign the transfer. Tan then produced two documents for the respondent to sign: one was a transfer and the other a receipt for $20,000. He signed the transfer and the receipt and asked Tan for the money. Tan replied that he had no money to pay to him and that he (the respondent) should get it from the first appellant. The respondent on hearing this said he would not give Tan the receipt; he took the receipt and left the office. Following the transfer of the property, there were demands from the respondent for the sum of $20,000 but the first appellant constantly stalled, saying that she had no money and that he would be given his half share when the property was eventually sold. The respondent appeared to have agreed to that arrangement, albeit presumably with some reluctance.

7           In 1985, the first appellant telephoned the respondent requesting him to engage a contractor to carry out some renovations to the property, namely, to tile the car porch and pillars and the rear part of the kitchen. He procured a contractor for her and the contractor carried out the works as required by her. For these works, the contractor sent her a bill for $2,400. She paid $1,900 and requested the contractor to collect the balance from the respondent. The contractor accordingly approached the respondent for the balance which the respondent paid.

8           In 1988, the first appellant made arrangements to sell the property to another son, Chia Juan Meng for $300,000. However the sale was abortive. Juan Meng’s evidence was that the first appellant had initially informed him that the property was to be a gift but when he went to the office of Tan to sign the relevant documents he discovered that he had to pay $300,000 as the purchase price for the property. As he had no money to pay for the property, he did not proceed with the transaction. The learned trial judge surmised that the more probable reason for Juan Meng withdrawing from the transaction was that the first appellant had sought to reserve for herself a life interest in the property and it was the prospect of having to live with her for the rest of her days which made him decide not to proceed with the transaction.

9           In January 1989, the first appellant informed the respondent that she intended to sell the house to the second appellant for $150,000. The respondent objected and demanded his half share. The first appellant stated that it was a gift to the second appellant and that as the house was in her name she could dispose of it as she liked. The respondent then approached the second appellant and demanded for his share in the property and the second appellant told him to get it from the first appellant. The respondent then instructed Chiam & Co, who wrote a letter dated 21 March 1989 to the first appellant which stated that:

(1)    The property was bought jointly by the respondent and the first appellant sometime in 1968 and each had paid
         half of the purchase price.

(2)    When the respondent was married he moved out of the above house to set up a home with his wife.

(3)    The respondent transferred his half share in the property to the first appellant on condition that when she sold the
         property she was to repay him one-half share of the sale price.

(4)    The respondent claimed $75,000 as being half of the sale price of $150,000.

10       To this letter the first appellant through her solicitors Tan See Swan & Co replied denying the allegations and in particular para (iii) thereof.

11       The first appellant went ahead with her plan. On 8 June 1989, she transferred the property to the second and third appellants for a consideration which was expressed in the transfer as $315,000. Two loans totalling $150,000 were obtained from the Central Provident Fund Board (CPF Board) and Oversea-Chinese Banking Corporation Ltd (the bank) which were secured by mortgages on the property and the amount of $150,000 was paid to the first appellant. A cheque for $165,000 being the balance sum, was issued by the second appellant to the first appellant but was never encashed, as the second appellant did not have sufficient funds in his bank account to meet this amount. The learned trial judge found that the balance of the purchase price of $165,000 was never intended to be paid to the first appellant and rejected the appellants’ feeble contention that the $165,000 was to be paid by monthly instalments of $400 each — it would take 38 years to repay the entire loan!

12       Following the transfer, a series of correspondence between the respondent’s solicitors and the first appellant’s solicitors regarding the property ensued but reached an impasse. On 25 January 1990, the respondent took out a writ against all the appellants. In the statement of claim, the respondent alleged that he was induced to transfer his undivided half share to the first appellant by the latter’s fraudulent representations and that in the alternative she exerted and exercised undue influence over him and thereby induced him to execute the transfer of his half share to her. He therefore averred that she held his undivided half share in trust for him and that she committed a breach of trust by transferring the property to the second and third appellants. As against the second and third appellants, the respondent averred that they knew at all times that the respondent had an undivided half share in the property and that they did not in fact pay the purported price of $315,000 and, accordingly, they were not bona fide purchasers for value without notice of his interest. The respondent claimed the necessary declarations, an injunction and damages. The first appellant in her defence denied the fraudulent representations and undue influence and averred that the respondent had transferred his undivided half share to her for a consideration of $20,000 and that she had paid that sum to him. It was further averred that the property was sold to the second and third appellants for $315,000 which was paid to the first appellant. In the alternative, the appellants pleaded that the claim of the respondent was time-barred by the Limitation Act (Cap 163), and in the alternative was barred by laches on the part of the respondent.

13       The claim was bitterly contested at the trial and the learned trial judge made the following findings. First, the first appellant and the respondent each contributed half of the purchase price of the property in 1968. Secondly, following the “revolver incident” on 25 March 1973 the respondent transferred his undivided half share to the first appellant but the respondent was not paid the consideration for the transfer, namely, the sum of $20,000. On this basis, the learned trial judge held that there arose a presumed resulting trust of the undivided half share in favour of the respondent and the presumption of the resulting trust was not rebutted. The appellant continued to hold the half share in trust for the respondent. Thirdly, the second and third appellants knew that the respondent had an undivided half share in the property; that he did not receive the sum of $20,000 as consideration for the transfer in March 1973, and that the transfer to them was in breach of trust. The learned trial judge therefore held that the second and third appellants were not bona fide purchasers for value without notice and that they were privy to the first appellant’s breach of trust in transferring the property to them. The learned trial judge, however, made no finding of fraudulent representations or undue influence on the part of the first appellant. She allowed the claim of the respondent and granted the necessary declarations, an injunction against the second and third appellants and ordered damages to be assessed. Against her decision, this appeal is now brought.

14       The main arguments before us were directed to the resulting trust as found by the learned trial judge. In her grounds of judgment she said:

At law there are two categories of resulting trust, the first where A transfers or directs a trustee for him to transfer the legal estate in property to B otherwise than for valuable consideration and, secondly, where A intends to give away all his beneficial interest in a piece of property and thinks he has done so but, by some mistake or accident, etc, he has failed to do so and by operation of law there will be a resulting trust for him of the beneficial interest which he has failed to dispose of (per Megarry J in Re Vandervell’s Trusts [1974] 1 All ER 47 at pp 17–18). We are only concerned here with the first category of resulting trust. Indeed, the defendants in their submissions concede that there would be a resulting trust in the plaintiff’s favour if not for the fact that he had been paid the sum. As it is my finding that the plaintiff was never paid the $20,000 or any other sum by the first defendant, it must follow that there is a presumption of a resulting trust in the plaintiff’s favour of his half share transferred to the first defendant without consideration.

15       It is on this part of her judgment that counsel for the appellants mounted his main attack. Counsel submitted that in the circumstances of the case no resulting trust could arise in favour of the respondent. On his own evidence, the respondent, after the “revolver incident”, agreed to go to the office of Tan See Swan on 27 March 1973 to execute a transfer of his undivided half share in the property for a consideration of $20,000. He did go to the office and did execute the transfer. He also signed a receipt for the sum of $20,000. He had admitted in evidence that the estimated value of the property was then about $40,000, and therefore $20,000 represented his half share of the property. He had asked for the money but was told by Tan to ask his mother for it, and as he did not receive the money he took back the receipt. On these facts, counsel submitted that the correct analysis was that there was an effective contract contained in or evidenced by the transfer and that the contract was enforceable. In consequence no question of resulting trust arose.

16       In considering the question whether a resulting trust arose in the circumstances of the case it is helpful to set out in extenso the following passage from the judgment of Megarry J in Re Vandervell’s Trusts (No 2); White and Ors v Vandervell Trustees Ltd at p 294:

… Where A effectually transfers to B (or creates in his favour) any interest in any property, whether legal or equitable, a resulting trust for A may arise in two distinct classes of case. For simplicity, I shall confine my statement to cases in which the transfer or creation is made without B providing any valuable consideration, and where no presumption of advancement can arise; and I shall state the position for transfers without specific mention of the creation of new interests.

(a)   The first class of case is where the transfer to B is not made on any trust. If, of course, it appears from the transfer that B is intended to hold on certain trusts, that will be decisive, and the case is not within this category; and similarly if it appears that B is intended to take beneficially. But in other cases there is a rebuttable presumption that B holds on a resulting trust for A. The question is not one of the automatic consequences of a dispositive failure by A, but one of presumption: the property has been carried to B, and from the absence of consideration and any presumption of advancement B is presumed not only to hold the entire interest on trust, but also to hold the beneficial interest for A absolutely. The presumption thus establishes both that B is to take on trust and also what that trust is. Such resulting trusts may be called ‘presumed resulting trusts’.

(b)   The second class of case is where the transfer to B is made on trusts which leave some or all of the beneficial interest undisposed of. Here B automatically holds on a resulting trust for A to the extent that the beneficial interest has not been carried to him or others. The resulting trust here does not depend on any intentions or presumptions, but is the automatic consequence of A’s failure to dispose of what is vested in him. Since ex hypothesi the transfer is on trust, the resulting trust does not establish the trust but merely carries back to A the beneficial interest that has not been disposed of. Such resulting trusts may be called ‘automatic resulting trusts’.

17       We are concerned here only with the first class of resulting trust, the second class being irrelevant. As stated by Megarry J, where the intention was not expressed or known, the law presumes a resulting trust in favour of the transferor or grantor. If it has been ascertained that the transferor or grantor intended that the grantee should take beneficially, then no presumed resulting trust would arise. This matter was stated very succinctly by Lord Upjohn in Vandervell v Inland Revenue Commissioners at p 312:

… Where A transfers, or directs a trustee for him to transfer, the legal estate in property to B otherwise than for valuable consideration it is a question of the intention of A in making the transfer whether B was to take beneficially or on trust and, if the latter, on what trusts. If, as a matter of construction of the document transferring the legal estate, it is possible to discern A’s intentions, that is an end of the matter and no extraneous evidence is admissible to correct and qualify his intentions so ascertained.

But if, as in this case (a common form share transfer), the document is silent, then there is said to arise a resulting trust in favour of A. But this is only a presumption and is easily rebutted. All the relevant facts and circumstances can be considered in order to ascertain A’s intentions with a view to rebutting this presumption.

18       If we may respectfully paraphrase the words of Lord Upjohn, in cases where the intention of the transferor or guarantor at the time of the transfer can be ascertained from the documents, then no question of any presumption of resulting trust would arise.

19       Reverting to the facts in the present case, we find that after the “revolver incident” on 25 March 1973, the respondent on the morning of 26 March 1973 accepted the offer of the first appellant that he should transfer his undivided half share of the property to her for the consideration of $20,000. On the following day, he voluntarily went with Wong to the office of Tan See Swan and there he executed a transfer of his undivided half share in the property for the consideration of $20,000. He also signed a receipt for the sum of $20,000. He admitted that the estimated value of the property was about $40,000. Therefore, the sum of $20,000 represented his share of the property. He did not receive any money at the time and was told by Tan to ask his mother for it. Because of that he took away with him the receipt which he had signed. On these facts, clearly the respondent agreed to the transaction; his intention was to transfer his undivided half share in the property for the sum of $20,000, being then the estimated market value of his half share. The nature of the transaction was one of contract for valuable consideration which he had agreed. Therefore, at the time of the transfer, the intention of the respondent was that his mother was to take the property absolutely and there was no intention on his part to retain his half share; he was prepared to accept the sum of $20,000 in full satisfaction of his half share. In these circumstances, there was no room for any presumption of resulting trust arising, and, in our judgment, no resulting trust of the half share in favour of the respondent arose.

20       We are therefore in agreement with the counsel for the appellants that after the execution of the transfer on 27 March 1973 the respondent’s interest in the property was a vendor’s lien for the unpaid purchase price of $20,000. At that time, his only claim against the first appellant was for $20,000 being the unpaid purchase price, and not for any share in the property.

21       That, however, does not conclude the matter in this case. After the execution of the transfer the respondent repeatedly asked the first appellant for the money, but she told him that she did not have the money and that she would let him have his share when she sold the property. On this the learned trial judge’s finding was as follows:

I find on the evidence that the plaintiff was misled by the first defendant’s representations after he had executed the transfer (and she failed to pay him the sum) that, he still had a half share in the property and he would get his share when the same was sold or when she passed away. The representations continued until she transferred the property to the second and third defendants in 1989 whereupon he realized the truth and sought legal advice followed by taking out these proceedings; the plaintiff cannot be said to be guilty of laches.

22       Counsel for the appellants took issue with the learned trial judge on this finding. This is the only finding disputed by the appellants. On examining the evidence, we find that the learned trial judge was fully justified in making this finding. In his evidence, the respondent had said that when he asked the first appellant for the money she said that when she sold the house she would give him his share or when she died he could sell the property and take his half share. The learned trial judge accepted his evidence and was fully justified in so doing. The only error in that finding, with respect, was that the first appellant represented that the respondent still had a ‘half share in the property’. In our view, the representation was that he would get half share of the proceeds of sale when she sold the property.

23       The respondent had relied and acted on the representation of the first appellant that when she sold the property he would receive his half share of the proceeds of sale; he had relied on her representation to his detriment. He had refrained from exercising his legal right to claim the sum of $20,000 for over 16 years. Indeed, more than that: he had at her behest assisted her in procuring a contractor to carry out the renovations on the property and paid for part of the costs of such renovations. By his compliance with her request, he had acted further to his detriment. He clearly had the expectation to receive half share of the proceeds of sale if and when she sold the property. The first appellant engendered this expectation and encouraged it at all material times. In our opinion, it would be inequitable and unjust if effect is not given to that expectation.

24       In Ramsden v Dyson, Lord Kingsdown said, at p 170:

The rule of law applicable to the case appears to me to be this: if a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation.

25       This statement of law, though made in a situation of landlord and tenant with which Lord Kingsdown was concerned, has been accepted as one of general application and was approved by the Privy Council in Plimmer v Wellington Corp as a correct statement of law.

26       In Inwards v Baker, the defendant was encouraged by his father to build his house on the latter’s property. So encouraged, the defendant built his house there and went into occupation and lived there continuously in the expectation and belief that he would be allowed to remain there for his lifetime or for so long as he wished. He lived there for a number of years. His father died, and about 12 years later, the personal representatives of the father’s estate took proceedings against him to recover possession of the property. The Court of Appeal held that he had an equity to stay in that house as long as he wished it to remain his home. Lord Denning MR, after referring to the statement of law laid down by Lord Kingsdown, said, at pp 36–37:

It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay. He has a licence coupled with an equity.

27       Later, his Lordship said, at p 37:

… In this case it is quite plain that the father allowed an expectation to be created in the son’s mind that this bungalow was to be his home. It was to be his home for his life or, at all events, his home as long as he wished it to remain his home. It seems to me, in the light of that equity, that the father could not in 1932 have turned to his son and said: ‘You are to go. It is my land and my house.’ Nor could he at any time thereafter so long as the son wanted it as his home.

Mr Goodhart put the case of a purchaser. He suggested that the father could sell the land to a purchaser who could get the son out. But I think that any purchaser who took with notice would clearly be bound by the equity. So here, too, the present plaintiffs, the successors in title of the father, are clearly themselves bound by this equity. It is an equity well recognized in law. It arises from the expenditure of money by a person in actual occupation of land when he is led to believe that, as the result of that expenditure, he will be allowed to remain there.

28       In a later case, Greasely v Cooke, Lord Denning MR held that it was not necessary that there should be any expenditure of money to found a proprietary estoppel. He said, at p 1311:

The second point is about the need for some expenditure of money — some detriment — before a person can acquire any interest in a house or any right to stay in it as long as he wishes. It so happens that in many of these cases of proprietary estoppel there has been expenditure of money. But that is not a necessary element. … It is sufficient if the party, to whom the assurance is given, acts on the faith of it — in such circumstances that it would be unjust and inequitable for the party making the assurance to go back on it.

29       In Crabb v Arun District Council, the plaintiff owned a piece of land which had access at point A on a road owned by the defendants and a right of way from A along the road. To enable him to sell his land in two parts the plaintiff sought from the defendants a second point of access at B, and a further right of way along the road. This was agreed to by the defendants at a site meeting. Subsequently, the defendants fenced the boundary between their road and the plaintiff’s land, erecting gates at both points A and B. After the plaintiff had sold part of his land together with the right of access over A and easement over the road without reserving any right in favour of the land retained, the defendants removed the gates at B and fenced the gap, leaving the retained part of the plaintiff’s land landlocked. The Court of Appeal held that the defendants, by their representations, had encouraged the plaintiff to act to his detriment in selling part of his land without reserving for himself a right of way. This gave rise to an equity in the plaintiff’s favour, and that equity was satisfied by granting the plaintiff a right of access at B and a right of way along the road.

30       Even more pertinent to the facts at hand is the case of Pascoe v Turner. There, the plaintiff who was a businessman became very friendly with the defendant. Their friendship further developed and she moved into his house as his housekeeper. In 1964, they began living together as husband and wife. In 1965, he took her to see another house which he later bought and they then moved in and continued to live there as husband and wife. He gave her housekeeping allowances but she used her own money to buy her clothes. Later the plaintiff developed an affair with another woman. The defendant was assured by the plaintiff that the house and everything in it were hers. The defendant continued to stay there and in reliance on the plaintiff’s assurance she spent money on decorations, improvements and repairs of the house. Some years later, the plaintiff sought to evict her and commenced proceedings for recovery of possession. The trial judge dismissed the action holding that the plaintiff had made a gift of the house and contents to the defendant and that the beneficial interest had passed under a constructive trust which was to be inferred from the words and conduct of the parties. On appeal, the Court of Appeal held that there were no documents supporting the gift and that a constructive trust could not be inferred. But the plaintiff’s encouragement or acquiescence operated as an estoppel giving rise to an equity in favour of the defendant. The Court decided that the only way to satisfy the equity was to order the plaintiff to execute a conveyance of the house to the defendant.

31       Another case in point is Re Basham (decd). There, the plaintiff’s mother married the deceased when the plaintiff was 15 years old. The plaintiff lived with them until her marriage in 1941, after which she continued to help them in their business without remuneration, but understood that she would inherit the deceased’s property when he died. In 1947, the plaintiff’s husband considered moving to a job with a tied cottage but the deceased opposed this, stating that he was willing to assist them to find another suitable house. Shortly after this, the deceased purchased a tenanted cottage, into which he moved after it became vacant. When a boundary dispute arose between the deceased and his neighbours, the plaintiff consulted her solicitors, having been told by the deceased that the house was hers. The plaintiff’s husband provided food for the deceased, kept the garden in order and helped the deceased with the household chores. The plaintiff bought carpets for the house, laid them herself and cooked the deceased’s meals. She was told by him that she had nothing to lose by so doing. A few days before his death the deceased indicated that he wished to make a will leaving his money to the plaintiff’s son and the house to the plaintiff. However, the deceased died intestate. The plaintiff claimed a declaration that she was absolutely and beneficially entitled to the house and the deceased’s other property. The court held that although the plaintiff had relied on a belief on future rights and not on existing rights, a proprietary estoppel could be raised. Since she had acted to her detriment in reliance on the deceased’s representations, she was entitled to the declaration.

32       In our judgment, the representation of the first appellant and the reliance thereon by the respondent to his detriment gave rise to an equity in favour of the respondent, and that equity is the entitlement to a half share of the proceeds of sale if and when the first appellant sold the property. In our opinion, if she had sold the property and kept the entire proceeds of sale, the court would impose on her a constructive trust in respect of the respondent’s half share of the proceeds. While the property remained unsold, she was in a fiduciary position in relation to the respondent’s equity, and as a fiduciary she was obliged to sell the property at market price and upon sale to pay the respondent half of the proceeds of sale. She did not sell the property. In breach of her duty as a fiduciary she transferred the property to the second and the third appellants in consideration of a sum of $150,000, and did not pay the whole or any part of this sum to the respondent. That transaction was not a true and genuine sale. In so acting as she did, she committed a blatant breach of her fiduciary duty to the respondent. She is therefore liable to account to the respondent.

33       We now turn to examine the part played by the second and the third appellants. It was the respondent’s evidence that in January 1989 when he visited the first appellant the latter told him that she intended to sell the property to the second appellant for $150,000 and he objected to the sale and demanded his half share. The respondent then went to see the second appellant and repeated his demand. The second appellant asked him to get the money from the first appellant and they had a quarrel. The respondent warned the second appellant not to buy the property and that if he did he had to pay the respondent his half share. The trial judge accepted the evidence of the respondent.

34       The learned trial judge found that the second and the third appellants lacked the personal means to pay any part of the actual price of $315,000 and that the purported payment of $165,000 to the first appellant as claimed by them never materialized. It seems to us that the parties adopted the sale price of $315,000 in order to induce the CPF Board and the bank to grant them the loans totalling $150,000. This amount was paid to the first appellant. As regards the knowledge the second and the third appellants had that the respondent had not been paid for the transfer of his half share of the property to the first appellant and their involvement in the breach of fiduciary duty by the first appellant, the learned trial judge found as follows:

As the second defendant before and after his marriage (in 1973) lived with the first defendant, the plaintiff and other siblings at the property, he must have known of the plaintiff’s half share and that the same was transferred by him without his receiving $20,000 or any other sum from the first defendant. It was Juan Meng’s evidence that he Goh Swee Fang v Tiah Juah Kim (LP Thean JA) knew about it because there were quarrels between the plaintiff and the first defendant on the issue off and on from 1973 to 1988. It is unlikely that the second and third defendants living under the same roof would not have known. There is therefore no question of the second and third defendants being bona fide purchasers for value without notice and they are therefore privy to the first defendant’s breach of the trust.

35       We respectfully accept this finding of the trial judge. It is quite evident that the second and the third appellants knew that the respondent had not been paid for his share in the property which he transferred to the first appellant and that the first appellant had made representations to the respondent that the latter would receive his half share of the proceeds upon the sale of the property. Obviously, it was agreed between the first appellant on the one hand and the second and third appellants on the other that the property would not be sold to them at the full market price but for the sum of $150,000, which was the total amount of the loans the latter could and did obtain from the CPF Board and the Bank. The first appellant had had no intention of paying the respondent the amount of $150,000 or any part thereof and the second and third appellants must have known that the respondent would not be paid any sum at all by the first appellant. By taking a transfer of the property and paying to the first appellant only $150,000, in the knowledge that the respondent would not be paid anything, the second and the third appellants knowingly assisted the first appellant in her scheme or plan to deprive the respondent of his entitlement to half share of the proceeds of sale of the property. They were players in the first appellant’s breach of fiduciary duty to the respondent. In these circumstances, the question is whether the second and third appellants are liable to account to the respondent the latter’s equity.

36       The case is analogous to a situation where a person, ie a third party, knowingly assisted a trustee in the disposition of a trust property in breach of trust. In such situation the third party would be liable to account to the beneficiary for the disposition of the trust property. The starting point is the classic statement of Lord Selborne LC in Barnes v Addy, at pp 251–252:

… strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees. [Emphasis added.]

37       It is the second category which is pertinent to this case. In Agip (Africa) Ltd v Jackson at p 292, Millett J said:

A stranger to the trust will also be liable to account as a constructive trustee if he knowingly assists in the furtherance of a fraudulent and dishonest breach of trust. It is not necessary that the party sought to be made liable as a constructive trustee should have received any part of the trust property, but the breach of trust must have been fraudulent. The basis of the stranger’s liability is not receipt of trust property but participation in a fraud: Barnes v Addy (1874) 9 Ch App 244, and see the explanation of the distinction between the two categories of the case given by Jacobs P in DPC Estates Pty Ltd v Grey [1974] 1 NSWLR 443.

38       The trial judge in this case did not appear to find that the first appellant was guilty of making false or fraudulent representations to the respondent. In other words, there was no finding of fraud on the part of the first appellant. The trial judge held that the respondent was misled by the first appellant’s representation that he would get his half share when the property was sold and that the representation continued until she transferred the property to the second and third appellants. However, it seems to us that there was certainly a lack of probity on the part of the first appellant in her conduct in dealing with the property and in her design or scheme of depriving the respondent of his half share of the proceeds of sale. We think that she was morally reprehensible in what she did. The second and third appellants, as we have held, were privy to her design or scheme and knowingly assisted her in carrying it out. In Agip (Africa) Ltd v Jackson (supra) the defendants, chartered accountants, were made to account and compensate the plaintiffs for the sums of money of US$518,822.92 when they knowingly assisted the plaintiffs’ accountant in laundering stolen money. By the same token, the second and the third appellants having been found to have assisted knowingly the first appellant in her breach of fiduciary duty are liable to account and compensate the respondent for his loss, which would be half of the proceeds of sale if the property had been sold at the material time.

39       We now turn to the question as to how the equity of the respondent should be satisfied. The undivided half share of the respondent in the property was transferred to the first appellant in 1973; that transfer was perfectly valid and ought to stand. In 1989, the first appellant transferred the property to the second and third appellants, and they in turn created mortgages thereon in favour of the CPF Board and the bank as security for the loans. As at that date, the respondent had no interest in the property as such. Furthermore, third parties had acquired indefeasible interests in the property. Accordingly, that transfer was also valid and ought to stand unaffected by the equity in favour of the respondent. Therefore, in our opinion, the order made below setting aside the transfer of the individual half share of the property to the first appellant and the transfer of the property to the second and third appellants cannot stand and must be set aside. In addition, there were also some consequential reliefs granted below. We think that the entire order should be set aside. We so order.

40       The first appellant was at liberty at the material time to sell the property at the market price. However, she transferred it to the second and third appellants for the sum of $150,000, although the transfer showed a consideration of $315,000. The latter sum was probably the sale price the second and third appellants represented to the CPF Board and the Bank in seeking the loans from them. We are disposed to take that figure as the market price at which the property could be sold at the time of the transfer. We are aware that this is a very unusual course to adopt. Ordinarily, we would direct an enquiry to be held to determine the market price at the relevant time. However, such an order would involve further proceedings between parties in what is essentially a family dispute which has gone on for a very long time. Some finality must be brought to bear on this dispute. We therefore adopt the figure of $315,000 as the market price of the property at the time of the transfer. The respondent’s equity is therefore half of that amount which is $157,500. Having decided on the equity in favour of the respondent, it is also necessary to safeguard it, otherwise the entire exercise would or may be fruitless.

41       We dismiss the appeal and make the following orders. First, there will be judgment in the sum of $157,500 in favour of the respondent against the appellants Goh Swee Fang v Tiah Juah Kim (LP Thean JA) with interest thereon at 6% from the date of the writ to the date hereof. Secondly, until this sum with interest is paid, the property stands charged with payment of this sum with interest, such charge to rank immediately after the mortgages (or charges) in favour of the CPF Board and the bank. Liberty is given to the respondent to apply to the High Court for direction to enforce the charge by way of sale of the property in default of payment by the appellants. Thirdly, until the payment is made, there will be an injunction restraining the second and third appellants from selling or disposing of or further charging the property (save and except for the payment and discharge of the equity of the respondent).

42       We order the appellants to pay the costs of the respondent here and below.

43       There will also be the usual consequential order for payment to the respondent of the deposit paid into court as security for costs.

Warren LH Khoo J:

44       I have read the judgment of LP Thean JA in draft and I respectfully agree with it, except for the remedy proposed. It has been found that the second and third appellants knowingly assisted the first appellant in her scheme or design to deprive the respondent of his entitlement to a half share of the proceeds of sale of the property. As stated in the judgment, they were players in the first appellant’s breach of fiduciary duty to the respondent.

45       The purported sale was not a genuine sale. The agreement of the parties was that the property would not be sold at the full market price but for the sum of $150,000, which was the total amount of the loans that could be obtained from the CPF Board and the bank.

46       The award of $157,000 represents half the presumed market value of $315,000 at the time. That was June 1989. Since then, it is common knowledge, property prices in Singapore have vastly increased. It seems to me that the second and third appellants by being allowed to keep the whole of the property subject only to the payment of this sum of $157,000 would profit enormously from the transaction. Conversely, the respondent would suffer a great loss as a result of the tainted transaction, which took place behind his back at a time of the appellants’ choosing and not his. There is no reason, it seems to me, why the second and third appellants should profit from their own wrong at the expense of the respondent. I would have allowed the respondent a half undivided share of the property. That, in my respectful view, would be an equitable way of satisfying the justice of the case.

Appeal dismissed.

Reported by Toh Han Li